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Thursday, May 31, 2012

Ecuadorian plaintiffs started the process of enforcing the $18 billion court judgement by filing a lawsuit in the Superior Court of Justice in Ontario to take over various assets that Chevron and its subsidiaries hold in Canada. Press release with more details below.

Ecuadorians Hit Chevron With $18 Billion Enforcement Action In Canada

Toronto, Ontario – Villagers from Ecuador's rainforest today filed a lawsuit in Canada as the first step in forcing the company to comply with an $18 billion court judgment rendered in Ecuador and imposed to permit the clean-up of what experts believe is the largest oil disaster on the planet.

The lawsuit, filed in the Superior Court of Justice in Ontario, (see here) targets Chevron and various subsidiaries that together hold significant assets in the country – including Canada's largest offshore drilling project and new investments in oil sands in the province of Alberta, said Alan Lenczner, the noted Canadian litigator representing the Amazon communities. Canada also has a law that allows interest to run on a foreign judgment during the enforcement process, potentially adding a significant amount to the judgment against the oil giant.

The Ecuadorians, who consist of the inhabitants of five indigenous groups and approximately 70 farmer communities, are being forced to file enforcement actions because Chevron refuses to pay the judgment imposed by an Ecuador trial court in February 2011, which was later affirmed by Ecuador's court of appeals in January. The oil giant has virtually no assets in Ecuador.

Pablo Fajardo, the lead lawyer for the Ecuadorians and the recipient of the Goldman Environmental Prize and a CNN "Hero" Award, said his clients were intent on collecting the entire judgment.

"The time for delay is over," he said. "For decades Chevron refused to address the contamination that has devastated our ancestral lands. While Chevron might think it can ignore court orders in Ecuador, it will be impossible to ignore a court order in Canada where a court may seize the company's assets if necessary to secure payment.

"We plan to exercise our legal right to collect every penny of the legitimate judgment from Ecuador, even if we have to drag Chevron kicking and screaming into courts around the world," said Fajardo, who grew up in poverty working in Ecuador's oil fields and who put himself through law school specifically to hold Chevron accountable for the environmental disaster. See this article in Vanity Fair about Fajardo.

The judgment in Ecuador resulted from an eight-year trial that produced more than 64,000 soil and water samples that pointed to extensive contamination at more than 350 Chevron well sites and oil production stations in a large swath of Ecuador's northern Amazon region, known as the Oriente. This area was considered one of the most bio-diverse areas on earth before Chevron – to lower production costs – deliberately discharged billions of gallons of toxic waste into the environment, decimating local tribesmen and plummeting the region into a tailspin of despair from which it has yet to recover, according to evidence before the court.

(A video that explains Chevron's substandard operational practices in Ecuador and efforts to corrupt the trial process can be seen here.)

The result of the dumping, according to evidence presented at trial, is a public health crisis and the poisoning of a large swath of pristine rainforest that indigenous communities had relied on for millennia for their sustenance. Five indigenous groups – the Cofan, Secoya, Siona, Quichua, and Huaroni – are struggling to survive. Part of the judgment will be used to restore the forest so that the indigenous communities can return to their hunting and gathering traditions, said Fajardo.

Lenczner, the Canadian litigator who is representing the Ecuadorians, is considered by Chambers Global to be one of the top lawyers in Canada, having appeared in courts in all ten provinces and argued numerous cases before the country's Supreme Court. He is the founding partner of Lenczner & Slaght, a boutique litigation firm with approximately 50 lawyers that recently was named one of the top ten litigation firms in the country by Canadian Lawyer magazine.

"I am honored to have been asked by the indigenous people of Ecuador to correct a historic injustice visited upon them by Chevron," said Lenczner, who visited Ecuador and reviewed the extensive trial and appellate records of the case, which exceed 250,000 pages.

"Chevron fought for nine years to move the trial from the United States to Ecuador, and then had a full opportunity for eight years to defend itself in Ecuador," Lenczner added. “This is a legitimate judgment and I believe Canadian courts will recognize it and enforce it as such."

Fajardo said that the Ecuadorians have a list of countries that are possible targets for enforcement actions and that additional actions are likely to be filed to ensure the full amount of the judgment can be satisfied. A significant portion of Chevron's assets are located around the world in over 70 wholly-owned subsidiaries and 75% of the company's annual profits are derived outside of the U.S., according to an analysis by the plaintiffs.

Almost all countries have specific laws governing the recognition and enforcement of foreign judgments. Most of the laws favor enforcement, subject to specific exceptions such as lack of jurisdiction or fraud. Chevron has stated it will try to block enforcement by alleging fraud, but the Ecuadorian trial and appellate courts directly addressed the allegations and rejected them. See the lower court judgment and the appellate court judgment.

Representatives of the affected population, who meet every two months in the rainforest in a body called the Assembly of the Affected Ones (Asamblea de Afectados), were thrilled that the first enforcement action was filed. The local population has suffered from high rates of cancer, spontaneous miscarriages, and oil-related diseases. See here, here, and here.

"This is a historic day for us," said Luis Yanza, the coordinator of the Assembly. "We might be impoverished materially but we are rich in spirit. The time has now come to use the force of law to make Chevron clean up its pollution. No company, even one as rich and powerful as Chevron, is above the law."

In Canada, Chevron's biggest assets are a 20% interest in the Athabasca Oil Sands Project, which yields a capacity of 255,000 barrels per day and supplies 10% of Canada's oil needs; the Hibernia project, which is Canada's largest offshore drilling project; and the Ells River concession, which covers 75,000 acres and contains up to an estimated 7.5 billion barrels of oil.

Chevron also is the largest gasoline convenience store marketer in British Columbia through a network of 162 service stations, 134 Town Pantry convenience stores, and 21 White Spot Triple O quick-serve restaurants. Chevron also owns the Burnaby refinery, which processes over 50,000 barrels of oil per day.

Total daily production for Chevron in Canada in 2011 averaged 29,000 barrels of crude oil, 4 million cubic feet of natural gas, and 40,000 barrels of synthetic oil from oil sands, according to public disclosures of the company. Canada is one of the top ten markets in the world for Chevron's capital spending in 2012, according to the company's filings with the U.S. Securities and Exchange Commission.

The filing of the enforcement action comes on the heels of a major challenge by Chevron shareholders over the Ecuador matter.

Today Chevron CEO John Watson suffered a stunning reprimand during a tense annual meeting when investors holding over 38% of the company's shares (representing $73 billion worth of stock) voted for a resolution that directly challenged his authority because of the Ecuador case. Last week, 40 institutional shareholders representing $570 billion under management – including the New York state pension fund – urged the company to settle the Ecuador litigation.